IMPACT OF THE FIRST IMPLEMENTATION OF A DEFERRED PROSECUTION AGREEMENT (DPA)

A highly significant judgment was handed down at Southwark Crown Court on 30 November 2015. It was the very first time, since being introduced in February 2014, an English court had been asked to consider and approve a Deferred Prosecution Agreement (DPA).

The judgment was warmly welcomed by the director of the SFO who described it as a “landmark”, and said that it would “serve as a template for future agreements”. The DPA was entered into by ICBC Standard Bank, though it is fair to say that the events leading to it took place before ICBC acquired its controlling stake in Standard Bank. This was not Standard Bank’s first brush with authority. As recently as January 2014, the Financial Conduct Authority fined them £7.64m in respect of failings in their money laundering compliance. The DPA also related to compliance failures, but this time in respect of failing to prevent bribery, and this was somewhat more costly. The amount paid on this occasion was $25m.

A DPA has been an effective tool of US law enforcement for more than 20 years, but there are important distinctions between a US DPA and the UK model. In the US a DPA can, and often does, emerge from negotiations between the prosecution and defence attorneys, and it is available to individuals as well as corporations. In the UK, DPAs are only available to corporations, and it is an invitation only event. It applies to a limited range of offences, being those committed under the Bribery Act, the Fraud Act, the Theft Act, money laundering offences, some company law offences and some of the offences created by the Financial Services and Markets Act.

An invitation to a DPA will be offered where the prosecution take the view that there is sufficient evidence to provide a realistic prospect of conviction, or there would be in a reasonable period of time if further enquiries were made, and, that it is in the public interest to offer a DPA rather than to prosecute.